Getting 100% for CID may not be easy

Normally, the process of establishing a Community Improvement District would be relatively easy.

Wes Franklin

Normally, the process of establishing a Community Improvement District would be relatively easy.

But getting 100 percent agreement among the voting landowners, as the City of Neosho would aim for, may not be so easy.

As reported throughout the latter half of this week, the city is proposing creation of a CID to potentially replace the Neosho Transportation Development District, should the latter dissolve because of legal issues. A court hearing has been set for Oct. 29 before 40th Associate Circuit Court Judge Kevin Selby to decide if the results of all the TDD's past elections, including creation of its half-cent sales tax, are invalid. That is based on the fact that the subsection of the state statute the Neosho TDD was created under does not provide for the property owners within the district to act as the legally qualified voters of the TDD, as defined by law.

Whether the court will decide the TDD's elections are null and void and force the district to dissolve, or whether some sort of legal solution will be reached to allow the TDD to continue, remains an unknown.

However, should the TDD dissolve, the city has proposed the CID as an alternative to hopefully try and keep most of the traffic improvements now planned under the TDD on track.

While many questions would have to be answered, and issues ironed out, the actual legal process of creating a CID would require the following steps, according to state statute:

• A petition signed by 50 percent of the owners of real property representing more than 50 percent of the assessed valuation within the proposed CID boundary would be presented to the governing body of the municipality. The petition must contain a five year plan and cost estimates for services and improvements to be provided and must state the maximum rate of real property taxes that may be submitted for voter approval, the maximum rate for special assessments, and the limitations, if any, on district borrowing and revenue generation, among other information.

• The governing body of the municipality would then give notice by publication and by mail and conduct a public hearing.

• At the conclusion of the hearing, the municipal governing body may establish the CID by ordinance.

A sales tax to operate the CID and pay for the proposed road improvements would still have to be voted upon by the landowners within the district. That would be done via mailed-in ballot.

"Think of it like an absentee ballot," explained city legal counsel Dan Vogel, with St. Louis law firm Cunningham, Vogel & Rost, by phone on Wednesday. "It's a very formal process, there is a certain amount of time that elapses. The ballots go out, there is notice of an election, the ballots come back in, you have written evidence of the exact ballot, and that forms the tally and then there is a formal certification of the election."

The CID sales tax would replace the TDD's half cent sales tax in order to fund most of the same improvements.

As proposed by the city, the CID would operate as its own political entity but the board of directors would be appointed by the city council.

"The processes are a little more clear with the CID statute than with the TDD," Vogel said. "The processes are a little more clear and far more commonly used. I think it would be easier to establish, maintain and operate a CID than a TDD."

There are problems, however.

For starters, the city says it needs 100 percent agreement among the landowners to establish the CID and, later, create its sales tax. That has been a prerequisite by other landowners.

"We're operating under the view that if there is opposition to this we may not do it," Vogel said. "We're trying to get confirmation that this is what everybody wants us to do. We haven't gotten that yet."

Identifying and tracking down all of the property owners within the proposed CID may pose a challenge, as it did during the TDD elections. Those elections never saw 100 percent participation, much less agreement, by all of the land holders.

All of the members of the current TDD board of directors are either landowners or represent landowners within the TDD, according to the district's bylaws. TDD board members have expressed serious concern that the boundaries of the city's proposed CID only match the TDD's west of State Highway 59. That cuts out the the planned extension of Laramie Lane to U.S. Highway 60 and a new stoplight intersection there, which was part of the TDD project scope that was approved by the district voters.

To include that project in the CID, however, would likely mean including Lowe's Home Improvement Center in the district, which does not vote in local elections as a corporate policy. Leaving Lowe's out, on the other hand, will mean a serious loss in sales tax income, TDD officials have countered.

Also, Kodiak Road is a Newton County road. In order for it to be included in a city CID, the road would need to be annexed into the city if CID funds are to be used to pay for its improvement. But other pockets of county land have been discovered within the TDD as well, which would have to be taken out.

Whether or not the Missouri Department of Transportation will stay committed to its $2.4 million cost share is another question, as that funding was tied to the TDD project scope. Additionally, the TDD is wrapped up in other financing that would somehow have to transfer, TDD officials say.

Still, TDD officials have indicated they wouldn't necessarily be opposed to a CID, per se, so long as it paid for all of the improvements previously approved by the TDD landowners, i.e. voters. As reported Thursday, TDD board chairman Dr. Jim Cummins told the Daily Wednesday evening that earlier this month the TDD's legal counsel had actually proposed to the city's attorneys the idea of a Newton County-initiated CID, but that the city had shot it down.

However, in what may be an unsolvable case of he-said/he-said, Mayor Richard Davidson responded in a Thursday email that that wasn't true, based on talks he had with Neosho city attorney Steve Hays.

"At no time during discussions with the TDD counsel was any form of a CID proposed by the TDD," Davidson stated.

Incidentally, Neosho already has at least one CID, formed in 2006, which encompasses the Big Spring Plaza strip mall to the immediate south and east of Walmart. However, that CID may eventually face its own legal troubles, as it has reportedly not paid any monies into the Tax Increment Financing District. The possibility of reporting the matter to the Missouri Attorney General's office was mentioned last month at a Neosho City Council meeting.